If there is one thing that economists excel at, it is predicting the past. They can rave over the data and profusely explain exactly why the stock exchange went up or why it fell, why the economy boomed too fast or why it is stuck in a depression, and so on and so forth, with more figures giving more accurate reasoning. But the moment you ask them about the future, they answer ambiguously, treading ever so carefully over each word, conditioning their forecasts on so many factors that they become meaningless.

And there really is nothing more simple to do than to dissect exactly what happened in the year 5761. It wasn't, as many claimed, the worst economic year for Israel, but it was bad enough. We have already seen years of hyper-inflation, zero growth, total loss of confidence in the shekel and dollar balances that reached the red line (back in the 1980s). So we shouldn't lose our sense of proportion.

Growth this year was zero and unemployment was high; but confidence was not lost, inflation did not rage out of control, foreign currency reserves are great and no one ran to open an under-the-bed-account. In other words, the economy is still functioning - and so there is hope. And it is unreasonable to claim that next year will be so dreadful. Whoever says so is forgetting that whatever has already slumped cannot fall further. Take tourism, for example. It is unreasonable to predict that tourism this coming year will take a further knock in the same way it did last; and the same goes for the construction sector. The high-tech sector is licking its wounds from 5761 and it seems unlikely that it will suffer a similar fall to the one it experienced this year.

In other words, the weights around the neck of the economy will not be any heavier this coming year. On the other hand, there will be a drop in the real rate of interest in Israel to around 3 percent and this will cut savings, and also increase consumer spending and investment. We can, therefore, expect a higher real rate of exchange - something around NIS 4.43-4.44 - that will encourage exports and cut imports, thereby boosting employment and improving our balance of payments.

But there are three threats on the sidelines: The budget that was passed yesterday by the government is too wasteful, with too heavy a deficit that will increase the burden on the public sector and, in turn, will slow down growth for the long term.

The second threat is that the intifada will worsen and turn Israel into a place in which only the crazies invest; while the third threat is that the United States will launch a war against terrorism and the place that will go up in flames will be - would you believe it - the Middle East. Although one shouldn't exaggerate the effect of the New York and Washington attacks on the world economy, the effect will be negative, nevertheless.

This is the right moment to remember the words of an economist from the Nessuah Zannex investment house who said that after the dust from New York and Washington had settled, the terror attacks would not be seen as an economic disaster; but instead, an "automatic stabilizer" would come into play and the shock would simply waken the American economy. What nonsense!

The economic damage is great and the argument is simply over the level of damage that has been suffered. And just to demonstrate the enormity of the absurdity, if the Twin Towers bombing is expected to help the U.S. economy, then maybe we should bomb the Azrieli Towers and part of the Defense MInistry compound too - and in so doing, "revive" the Israeli economy.